Money Today Reporter Soonbin Hong | 2023.03.11 10:00
[원자재로 살아남기]Read more about lithium prices… Lithium carbonate vs Lithium hydroxide
Editorial comment | Over the past year, stock markets around the world have been rocked by the surge in raw material prices. There are crowded investors who have lost their way, but on the other hand, more and more people are taking advantage of the commodity supercycle as an opportunity to invest. Money Today will carefully analyze the raw material market flow and act as a guide for ‘Wonrin’.
The price of lithium carbonate, a key raw material for batteries, is falling rapidly. As a result, it is expected that the cost burden of domestic battery manufacturers will decrease. However, it is analyzed that it is difficult to expect a cost reduction effect because the price of lithium hydroxide, which is a raw material for high-end batteries that domestic companies use as their main focus, is still high.
Domestic companies scramble to secure lithium hydroxide. In the financial investment industry, there is a possibility that the price of lithium hydroxide may rise again as the demand for high-end batteries continues to increase.
Lithium carbonate, which has risen more than 9 times… 36% down this year
According to KOMIS (Korea Resource Information Service) on the 10th, the price of lithium carbonate on the 8th recorded 304.5 yuan per kilogram, down 2.87% from the previous trading day. The price of lithium carbonate fell by 35.8% this year.
The price of lithium carbonate began to rise sharply in 2021 as production of electric vehicles began in earnest. The price of lithium carbonate, which was around 60 yuan per kg in early 2021, rose to 581.5 yuan per kg on November 11 last year. It jumped more than 9 times in less than two years.
However, the price of lithium carbonate started to fall from the end of last year. This follows inventory adjustments by global cathode materials and finished car manufacturers. In addition, the fact that CATL, a Chinese battery manufacturer, decided to supply lithium at a price below the market price to some of its customers also had an impact. CATL’s share in the Chinese market is more than 50%.
Lithium carbonate is a raw material for LFP (lithium iron phosphate) batteries, which are mainly used in low-cost electric vehicles. In the past, when lithium carbonate prices rose, battery prices also rose due to selling price adjustments, but now the opposite is expected to happen.
Yoon Hyuk-jin, a researcher at SK Securities, said, “In the short term, cell makers will benefit from improving costs, but in the long term, it will act as downward pressure on battery prices.”
The price of lithium hydroxide used in high end batteries is still high
Unlike lithium carbonate, the price of lithium hydroxide used in high-end nickel ternary batteries is still high. On the 9th (local time), the price of lithium hydroxide traded on the London Metal Exchange (LME) recorded $72,239.13 per tonne, the same as the previous trading day. It decreased by 11.67% from two months ago. During the same period, the price of lithium carbonate fell by 32.7%.
Lithium compounds used in cathode materials are divided into lithium carbonate and lithium hydroxide. Lithium hydroxide has a higher energy density than lithium carbonate and is used in high-nickel ternary batteries produced mainly in Korea. High nickel ternary batteries include NCM (nickel cobalt manganese) and NCA (nickel cobalt aluminum).
Unlike lithium carbonate, experts predict that the price of lithium hydroxide will rise due to long-term demand growth. This is because global electric vehicle manufacturers will install more high efficiency ternary nickel batteries in medium and high priced electric vehicles.
Hi Investment & Securities predicted that after 2027, lithium hydroxide supply could not keep up with demand, causing supply and demand instability. Lee Sang-heon, a researcher at Hi Investment & Securities, said, “The price of lithium hydroxide will gradually rise in the future as the current lithium mining and smelting technology is insufficient to keep up with the exploding demand.”
Domestic battery makers also began to secure lithium hydroxide. It is interpreted that it is to prepare for the increasing cost burden. POSCO Holdings is building a lithium hydroxide production plant in Argentina. It can produce 25,000 tonnes a year, with the aim of completion in the first half of 2024. SK Ondo also bought a 10% stake in Lake Resources, an Australian resource development company, in October last year.
An official from a battery company said, “Battery-related companies are scrambling to sign MoUs with mine development companies or make equity investments to prepare for future lithium hydroxide price hikes.”
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